CHICAGO, IL--(Marketwired - Mar 18, 2014) - Retirement confidence has reached its highest level since its last peak in 2007, according to this year's Employee Benefits Research Institute's (EBRI) Annual Retirement Confidence Survey. This year's edition of the survey examined various areas related to retirement, ranging from worker confidence and savings targets to post-retirement expectations.
BMO Retirement Services, a co-sponsor of the annual study, highlighted the key results of the survey, which found 18 percent of respondents feel very confident in their retirement. In particular, the study observed a significant contrast in confidence between workers who are enrolled in a retirement plan and those who are not. Twenty-four percent of respondents with plans feel very confident in their retirement future and only 9 percent of workers without plans reporting feeling confident.
BMO Retirement Services, part of BMO Global Asset Management, is sponsoring the study for the second year and provides services to defined contribution plan sponsors and their advisors, including plan design and administration, participant tools and guidance, and access to a full range of investment solutions. With North America-wide capabilities, BMO Retirement Services helps participants achieve retirement security in both the United States and Canada.
"We commend EBRI on the latest installment of their highly regarded survey," said Todd Perala, Director, BMO Retirement Services. "We're encouraged by this year's uptick in retirement confidence. It was particularly welcome news to see that confidence was strongest amongst workers with an established retirement plan, reaffirming that simply enrolling in their employer's company-sponsored retirement plan may be one of the most important steps to achieving retirement security."
With nearly half of respondents without a plan feeling "not at all confident" in their retirement, Mr. Perala observed several key differences in workers with and without plans. These and other findings include:
- Workers without retirement plans have significantly less in savings
Of workers without a plan, 73 percent of respondents have less than $1,000 saved. "This figure has more than doubled over the past decade, suggesting that there is room for improvement when it comes to actively saving," said Mr. Perala.
- Workers continue to cite ambitious savings targets
Mr. Smith noted that, despite setting aggressive savings goals, there is still little evidence that workers are taking commensurate actions to achieve them. Additionally, the average amount of reported savings needed increases as retirement confidence decreases, especially for workers closer to retirement.
- Daily expenses are the main reason workers aren't saving more
Fifty-three percent of respondents cited day-to-day expenses as their biggest saving obstacle. Only five percent of respondents listed paying off their mortgages and another five percent blamed student loans and education costs.
- Workers find retirement income estimates useful
The majority of respondents feel it is useful to hear an estimate of the monthly income they might expect from their retirement plan. Notably, most respondents would continue contributing to their plans at current levels despite hearing the estimate, demonstrating that most felt the estimate was in line with expectations. Most would also maintain their contribution rate if there was a change from current pre-tax treatment for 401(k)s to a Roth design.
- More people think they are going to work after retirement than actually do
Sixty-five percent of workers who responded expect to work after retirement. "This is an interesting observation given that only 27 percent of retirees actually reported having worked post-retirement. This is likely a result of workers, especially those without current plans, lacking confidence in their retirement and feeling pressure on their savings accounts," added Mr. Perala.
BMO Retirement Services Launches New Mobile App
BMO Retirement Services also announced today that it has launched a new mobile app to help provide plan participants with better access to information about their retirement savings. The app is designed specifically for defined contribution plans and their participants. In addition to receiving their account balances, employees can view personal rates of return, review contribution information and monitor investment performance.
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BMO Retirement Services is an integral part of BMO Global Asset Management and a premiere, award-winning provider of retirement services. We have been recognized as a national provider of both defined contribution recordkeeping and defined contribution investment-only services by the National Association of Plan Advisors.
BMO Global Asset Management provides holistic, solution-driven services to our institutional and high-net-worth clients. With a 40-year legacy of fiduciary service -- and goal of promoting retirement readiness to our more than 500,000 participants in over 1,000 retirement plans -- our clients include retirement plans, Taft-Hartley funds, government and public funds, not-for-profit organizations and family offices. BMO Global Asset Management's commitment to service excellence has led us to be recognized by Pension & Investments as one of the Top 100 largest asset managers.
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